3.11.14.13
♦Entity Perfection – General♦

3.11.14.13.2
(01-01-2015)♦Entity Perfection – Name Control♦

Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three
positions.

Disregard the word "THE"
in the Name Control, only when followed by more than one word.

Determine the Name Control from the "Name of Estate or Trust"
line at the top-center of Form 1041 or the "Name of Trust"
line on Form 1041-N and Form 1041-QFT. If no indication in the name line, use box A or if no box is checked use exemption amount .

Exception:

Name controls assigned by MODI-EIN program. See paragraph (4) below.

See Job Aid Document 7071A, Name Control Job Aid - For Use Outside of the Entity Area, to determine the Name Control.

Example:

John Wren Trust (Name control is WREN).Trust for Sparrow Lake (Name control is SPAR).Special Needs Trust FBO John Doe (Name control is DOE.

Name controls for EINs assigned by the MODI-EIN program are different. If the EIN prefix begins with 20, 26, 27, 45, 46, or
47 and it is a TRUST return ), then the name control will be the first four characters of the first name of the individual,
in the Primary Name Line. The name control for an estate will still be the first four characters of the person's last name.

Example:

John Wren Trust (Name control is JOHN) J R Wren Trust (Name control is JRWR)Trust for Sparrow Lake (Name control is SPAR)Estate of John Smith, Deceased (Name control is SMITSpecial Needs Trust FBO John Doe (Name control is JOHN.John Paul Estate Special Needs Trust (Name Control is JOHN, unless there are other indicators, a date of death or exemption for an estate, would be indications that it is an estate,
(then the Name Control if an estate would be PAUL.

Edit the Name Control as follows:

If ...

And ...

Then ...

Unable to determine the Name Control,

Unnumbered

Research IDRS.

If found, edit to the proper location.

If not found, route to Entity Control following local procedures.

Unable to determine the Name Control,

Numbered

Edit Action Code 352 (Name Research).

Leave return in batch.

A return indicates the taxpayer has filed bankruptcy (e.g., shows "RECEIVER"
, Bankruptcy "TRUSTEE"
, or "DEBTOR IN POSSESSION"
in the entity area or on an attachment,

Route to Entity Control following local procedures. Do not edit Name Control.

See IRM 3.11.14.8.2.

A Fiduciary or Fiduciary name change will be indicated by a mark in the "Change in fiduciary or Change in fiduciary name"
box in Section "F"
of Form 1041.

If ...

Then ...

The "Change in fiduciary"
or Change in Fiduciary Names box(es) is/are checked, or the Name and title of Fiduciary line has been altered (i.e., crossed
out and updated)

Notate "TC 016"
in the upper-left margin of Form 1041.

Input TC 016 to update the Fiduciary information, using local procedures.

Only the "Change in fiduciary address"
box is checked,

Do not edit "TC 016"
.

Note:

ISRP will input the new address.

See IRM 3.11.14.13.4, if an In-Care-Of Name is also present.

A Trust name change will be indicated by a mark in the "Change in trust's name"
box in Section F of Form 1041.

If ...

Then ...

The "Change in trust's name"
box is checked,

Route to Entity using local procedures.

3.11.14.13.3
(01-01-2015)♦Entity Perfection – "In-Care-of"
Name♦

An "in-care-of"
name can be identified by the words "in-care-of"
or the symbols "c/o"
or "%"
(percent). See Figure 3.11.14-27.

Ensure the "in-care-of"
name is located in the proper location (above the street address).

If …

Then …

The in-care-of name is located on the street address line preceding the street address,

No editing is required.

The "in-care-of"
name is located above the first name line or below the street address,

Arrow the "in-care-of"
name so it appears below the first name line and above the street address.

The "in-care-of"
name is shown on an attachment,

Edit the "in-care-of"
name above the street address beginning with the "%"
or "c/o"
in the first position.

The street address for the "in-care-of"
name is different from the street address of the Fiduciary,

Arrow the "in-care-of"
street address below the "in-care-of"
name or edit the "in-care-of"
street address below the "in-care-of"
name if located on an attachment.

The USPS established new address requirements for APO/DPO/FPO addresses. If the old address appears, convert to the new state
code abbreviation based on the Zip Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). (Figure 3.11.14-30) APO/DPO/FPO addresses are considered domestic addresses. Refer to APO/DPO/FPO Conversion Chart below:

3.11.14.13.5
(01-01-2015)♦Entity Perfection – Foreign Address♦

A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

Returns with APO/DPO/FPO addresses are considered domestic addresses. See IRM 3.11.14.13.4.

Route returns with a foreign address to Ogden Submission Processing Campus (OSPC) for processing. Prepare Letter 86C to inform
the taxpayer that the return has been sent to Ogden.

Exception:

All 1040-NR Fiduciary returns filed using an EIN instead of a SSN are processed in Cincinnati as Non-Master File (NMF). Fiduciary
Form 1041, that has a Form 1040-NR attached for an individual (SSN) will be forwarded to Austin SPC for processing.

Returns with addresses in the following U.S. Possessions/Territories are considered to be foreign for processing purposes
but are edited in the same way as domestic addresses.

A two-character alpha code must be edited for the Possession/Territory name:

U.S. Possession/Territory

Abbreviation

American Samoa

AS

Federated States of Micronesia

FM

Guam

GU

Marshall Islands

MH

Northern Mariana Islands

MP

Palau

PW

Puerto Rico

PR

Virgin Islands (U.S.)

VI

A ZIP code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.11.14-18.

All other foreign addresses are edited the same as a domestic address with the following exceptions:

The foreign country must be the last entry in the address.

Circle the foreign country and edit the country code preceded by a "/"
and followed by "/$"
(e.g., "/GM/$"
is edited for Germany). See Document 7475, State and Address Abbreviations, Major City codes (MCCs), ZIP Codes and Countries, for official foreign Country Codes.

A unique country code will be edited for returns filed with an address in Canada. See IRM 3.11.14.13.5.1, Country Code - Canada.

Section "F"
of Form 1041 provides the taxpayer with check boxes to indicate any of the following:

If ...

Then ...

Initial Return

See IRM 3.11.14.11.3

Final Return

See IRM 3.11.14.11.2

Amended Return

See IRM 3.11.14.8.1

Change in Fiduciary

See IRM 3.11.14.13.2

Change in Fiduciary's Name

See IRM 3.11.14.13.2

Change in Fiduciary's Address

See IRM 3.11.14.13.2

Change in Trust's Name

See IRM 3.11.14.13.2

3.11.14.16
(01-01-2015)Form 1041, Income Section (Lines 1–9)

This subsection provides instructions for editing Lines 1 through 9 of Form 1041. Edit Lines 1 through 9 in dollars only.

Do not bracket any entry, unless editing or computing a negative amount.

Perfect all illegible or misplaced entries (when possible).

Delete misplaced entries and edit to the appropriate lines.

If a Nontaxable Grantor Trust do not edit amounts from schedules or attachments to Lines 1 through 9, Form 1041. "X"
Schedules I and/or D if transcription entries are present.

3.11.14.16.1
(01-01-2015)Line 1 – Interest Income

Accept taxpayer's entry.

3.11.14.16.2
(01-01-2015)Line 2a – Total Ordinary Dividends

Accept taxpayer's entry.

3.11.14.16.3
(01-01-2015)Line 2b(2) – Qualified Dividends

Qualified Dividends Allocable to Estate or Trust are reported on Line 2b(2) of Form 1041.

If present, Line 2b(2) must be a positive amount. Never bracket a Line 2b(2) amount as a loss.

Though transcribed, Line 2b(2) is not used in the computation of Total Income (Line 9). Instead, Line 2b(2) is combined with
Line 2b(1) (Qualified Dividends Allocable to Beneficiaries) to equal the amount reported on Line 2a.

If Line 2b(2) is blank or illegible and the Qualified Dividends Allocable to Estate or Trust are reported on attachments to
the return, determine the correct amount and perfect Line 2b(2). If the correct amount cannot be determined, do not perfect
Line 2b(2) or correspond for Qualified Dividend information.

If an amount is present on Line 23 of Schedule D and Line 2b(2), page 1, of 1041 is blank, edit the amount from Line 23 to
Line 2b(2) of 1041.

Exception:

If the ESBT box is checked on Form 1041, do not edit the amount to Line 2b(2) of Form 1041.

3.11.14.16.4
(01-01-2015)Line 3 – Business Income (or Loss)

A Schedule C/C-EZ (Form 1040) or equivalent (computer printouts, written attachments, etc.) must be attached to Form 1041
if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 3 of Form 1041. (Figure 3.11.14-31)

Edit Line 3 as follows:

If ...

And ...

Then ...

Line 3 contains an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Schedule C/C-EZ (Form 1040) or equivalent is blank or missing,

Correspond for the missing Schedule.

If Line 3 is blank or illegible,

Schedule C/C-EZ (Form 1040) or equivalent is present,

Edit amount from Line *31, Schedule C to Line 3 of Form 1041.

Bracket Line 3 if a loss.

*(Line 3, Schedule C-EZ)

Note:

Line 31 of Schedule C reflects the Business Income (or Loss) and Line 3 of Schedule C–EZ reflects Business Income only.

3.11.14.16.5
(01-01-2015)Line 4 – Capital Gain or Loss/Schedule D

The total gain or loss from the sale or exchange of capital assets is reported on Line 4 of Form 1041.

Line 4 cannot have an amount in excess of -$3,000. If the taxpayer enters more than -$3,000, X the entry and edit -$3,000
to Line 4.

Exception:

On a Final return, allow losses exceeding $3,000 but only if it is entered by the taxpayer on Line 4. Tax examiners should not enter a loss greater than $3,000 on Line 4, if blank.

Form 8824 must be attached if Schedule D (Form 1041) or Form 4797 (Sales of Business Property) is attached to Form 1041 and
the filer has notated "RELATED PARTY LIKE-KIND EXCHANGE"
on Schedule D or Form 4797.

Schedule D must be attached if an amount≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 4 of Form 1041.

If Schedule D is not attached and ...

Then ...

Line 4 of Form 1041 contains an entry≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Correspond.

Form 8824 is attached with an amount greater than zero on Line 22,

Correspond, regardless of the entry on Line 4 of Form 1041.

Reminder:

Edit CCC "1"
when Form 8824 is attached.

Form 4952 is attached and an amount is present on Line 4g (Form 4952), See IRM 3.11.14.35.

Correspond.

Do not edit Line 4 if corresponding.

Only a Schedule D (Form 1041) is acceptable. If the taxpayer substitutes a Schedule D from any other tax return )i.e., Form
1040, Form 1065, Form 1120, etc.), correspond.

Edit Schedule D in dollars only.

Only one Schedule D can be processed. If more than one is attached, take the following actions:

Note:

If Line 19(3)/20 is blank, compute by adding Lines 19(1) and 19(2), Use the comparison with Line 4, Form 1041. It is not necessary
to edit Line 19(3).

If ...

Then ...

Line 4 of Form 1041 equals Line 19(3)/20 of one of the Schedules D,

Process the Schedule D that matches Line 4 of Form 1041.

"X"
the remaining Schedules D.

Move deleted Schedules D out of sequence order.

Line 4 of Form 1041 equals the combined totals of the multiple Schedules D Line 19(3)/20,

Edit the combined totals of the Schedules D to the first Schedule D.

Bracket if negative.

"X"
the remaining Schedules D.

Move deleted Schedules D out of sequence order.

Line 4 of Form 1041 equals Line 19(3) or Line 20 on more than one of the attached Schedules D,

Line 4 of Form 1041 does not equal Line 19(3) or Line 20 on any of the attached Schedules D,

Correspond to determine the correct Schedule D amount.

Transcription of page 1, Schedule D will be for tax year 2013 and subsequent tax returns with a current revision of Schedule
D attached. At this time, we are only capturing the data entered on the Schedule D. If a 201311 or prior revision is used,
line through the line numbers on page 1, Schedule D and convert page 2 line numbers.

3.11.14.16.5.1
(01-01-2015)Schedule D, Part III, Page 2

When Schedule D (Form 1041) is attached the following lines will be transcribed from Schedule D, Part III Column 2, Page 2.

3.11.14.16.5.2
(01-01-2015)Schedule D, Part V, Page 2

Schedule D, Part V, page 2, Tax Computation Using Maximum Capital Gains Rates is completed by the taxpayer when both Lines 18a and 19 in column (2) are gains, or an amount is entered in Part I or Part
II and there is an entry on Form 1041, Line 2b(2) and Form 1041, line 22 is more than zero.

If Line 43 is blank, compute by adding Lines 37, 41, and 42.

If an amount is present on Line 23 of Schedule D and Form 1041, Page 1 Line 2b(2) is blank, edit the amount from Schedule
D, Line 23 to Line 2b(2) of Form 1041.

Exception:

If the ESBT box is checked on Form 1041, do not edit the amount to Line 2b(2) of Form 1041.

If an amount is present on Line 45 of Schedule D and Line 1a of Schedule G is blank, edit amount from Line 45 to Line 1a of
Schedule G.

3.11.14.16.5.3
(01-01-2015)Schedule D-1, Continuation

Schedule D-1 (Form 1041) Is used to report gains and losses from the sale or exchange of capital assets if there are more
transactions to report than spaces on Lines 1a or 6a of Schedule D

Note:

Schedule D-1 is not valid for returns after 201212.

Schedule D-1 should be attached to support Line 1b and/or Line 6b of Schedule D.

Note:

Do not correspond for missing Schedule D-1 unless you are corresponding for other items.

If an amount is present on Line 6b of Schedule D and Schedule D-1 or supporting attachment is missing:

All income or losses from rents, royalties, partnerships, other estates and trusts (except dividends, certain interest, and
capital or ordinary gains and losses and depreciation) are reported on Line 5 of Form 1041.

Note:

Effective TY 2007 and subsequent, farm rental is no longer reported on Form 4835, and should be reported on Schedule E, line
40.

A Schedule E (Form 1040) or equivalent (e.g., computer printouts, written attachments, etc.) must be attached to Form 1041
if an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 5 of Form 1041.

Edit Line 5 as follows:

If ...

And ...

Then ...

Line 5 contains and entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Schedule E (Form 1040) or equivalent is blank or missing,

Correspond for the missing Schedule.

If Line 5 is blank or illegible,

Schedule E (Form 1040) or equivalent is present,

Edit amount from Line 41, Schedule E to Line 5 of Form 1041. Figure 3.11.14-34

Form 4797 is attached, compare Line 7, of Form 1041 with Line 17* of Form 4797, *(Line 18 for 2003 and prior)

If different, edit Form 4797 amount to Form 1041, Line 7.

Form 8824must be attached if Form 4797 (Sales of Business Property) or Schedule D is attached to Form 1041 and the filer has notated "RELATED
PARTY LIKE-KIND EXCHANGE"
on Form 4797 or Schedule D. Correspond for Form 8824 if missing.

Reminder:

Edit CCC "1"
if Form 8824 is attached.

3.11.14.16.9
(01-01-2015)Line 8 – Other Income (or Loss)

Other income or loss not shown on lines 1 through 7 is reported on Line 8 of Form 1041.

An amount on Line 8 may be supported by an attached statement:

If ...

Then ...

If an amount from Form 982 or Form 4972 is present on Line 8,

Treat as a misplaced entry. Decrease the Line 8 amount by the amounts from Form 982 or Form 4972.

Note:

Form 4972 amount will be edited to Line 1b on Schedule G.

Other Income items are included on Lines 1 - 7,

Add all the "Other Income"
items and include in Line 8. Bracket if negative.

A statement is not attached,

≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

The attachment shows the type of income to be the same as that reported on any of Lines 1 through 7,

Decrease the Line 8 amount by that amount and increase the appropriate Income line (Lines 1 through 7). (Figure 3.11.14-36)

Line 8 is blank or illegible and "Other Income"
is reported on an attachment to Form 1041,

Determine if the amount has been reported elsewhere on the return. If unable to determine, edit the amount to Line 8 of Form
1041.

The amount on Line 8 does not match the amount on the attachment and there are entries leading to the correct amount,

Edit the correct amount on Line 8 of Form 1041.

Caution:

The Net Operating Loss (NOL) must be reported on Line 15b. If reported on any other line, "X"
the amount, edit to Line 15b as a positive amount only, and adjust the appropriate Total line(s).

If a negative amount is present on any of Lines 10 through 15c, determine from Lines 16 and 17 as instructed in the table below:

If ...

Then ...

Line 16 is positive,

"X"
(delete) the negative amounts on Lines 10 through 15c

Move the deleted amounts from Lines 10 through 15c to Line 8 as a positive amount.

If an amount was already present on Line 8, delete the existing Line 8 amount and recompute Line 8 to include the amounts
moved from Lines 10 through 15c.

Recompute the amounts on Lines 9, 16, 17, and 22. (Figure 3.11.14-38)

Line 16 is negative and Line 17 is less than Line 9,

Note:

Taxpayers (particularly on computer-generated tax returns) may enter negative amounts on Lines 10 through 15c which are actually
positive.

Do not bracket or move the entries in Lines 10 through 15c.

Line 16 is negative and Line 17 is greater than Line 9,

"X"
(delete) the negative amount(s) on Lines 10 through 15c.

Move the deleted amount(s) from Lines 10 through 15c to Line 8 as a positive amount.

If an amount was already present on Line 8, delete the existing Line 8 amount and recalculate to include the amounts moved
from Lines 10 through 15c.

Recompute the amounts on Lines 9, 16, 17, and 22.

If a negative amount is on Line 15b and the taxpayer indicates a NOL (net operating loss), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Do not bracket or move the entry.

Exception:

If a negative entry is present on Line 15a, 15b, or 15c and the taxpayer indicates that all of a negative amount is for a
Tax Exempt Allocation, there is only one other deduction claimed within Lines 10 through 14, and Line 1 in the "Other Information"
Section (Page 2 of Form 1041) is marked "Yes"
or is blank and no computation is present, process as instructed in IRM 3.11.14.17.8.

3.11.14.17.2
(01-01-2015)Line 16 – Total of Lines 10 through 15c

Line 16 is the total of Lines 10 through 15c on Form 1041.

If Line 16 is blank, add the entries on Lines 10 through 15c and edit amount to Line 16.

Line 16 will normally be positive. However, taxpayers (particularly on computer-generated tax returns) may enter negative
amounts on Lines 10 through 15c which are actually positive, resulting in a negative amount on Line 16.

If ...

Then ...

Line 16 is negative and Line 17 is less than Line 9,

Do not bracket or move the entries in Lines 10 through 15c.

Line 16 is negative and Line 17 is greater than Line 9,

Delete the negative amount(s) on Lines 10 through 15c.

Move the deleted amount(s) from Lines 10 through 15c to Line 8 as a positive amount.

If an amount was already present on Line 8, delete the existing Line 8 amount and recalculate to include the amounts moved
from Lines 10 through 15c.

Recalculate the amounts on Line 9, Line 16, Line 17, and Line 22.

If an entry is present on Line 16 but all of Lines 10 through 15c are blank, determine if an attachment or schedule is present
which clarifies the deduction.

If documentation is present, edit the amount to the appropriate Line 10 through 15c.

If documentation is not present, correspond to determine the proper deduction amount, if any.

3.11.14.17.3
(01-01-2015)Line 17 – Adjusted Total Income

Line 17 is derived by subtracting Line 16 from Line 9.

This line is not transcribed and does not require perfection. However, any changes made in the Income or Deductions sections
may require recomputing Line 17. This may then impact the perfection of subsequent compute lines (i.e., Lines 21 and 22).

Note:

3.11.14.17.5
(01-01-2015)Line 19 - Estate tax deduction

Only positive entries are valid for Line 19. If negative, remove the brackets and continue editing the return.

3.11.14.17.6
(01-01-2015)Line 20 - Exemption

Accept taxpayer's entry.

Note:

For TY 2001, the taxpayer was required to notate "SECTION 642(b)(2)(C)"
in the dotted potion of Line 20. If "SECTION 642(b)(2)(C)"
is notated on Line 20 of a TY 2001 Form 1041, edit Fiduciary Code "8"
.

Allowable exemptions are:

$600 for a decedent estate.

$300 for a trust, which under its instrument, is required to distribute all of its income for the taxable year (This deduction
is allowed regardless of whether the trust is simple or complex.).

$100 for a trust which is not required to distribute all of its income for the taxable year (Generally, complex trusts are
entitled to this exemption.).

Same exemption as an individual under IRC 151 for a bankruptcy estate.

Note:

Grantor trusts are not entitled to an exemption, except for a partial grantor trust, which is entitled to the appropriate
exemption for its non-grantor trust portion.

A Qualified Disability Trust is entitled to the same personal exemption amount as an unmarried individual and is effective
for tax years ending after September 10, 2001. A Qualified Disability Trust is also subject to the same phaseout as the personal
exemption if the trust's modified AGI exceeds certain limits. Taxpayers must complete the Exemption Worksheet for Qualified
Disability Trusts to figure the amount of the trust's exemption when their modified AGI exceeds the limits shown in the chart
below.

Note:

This provision does not apply to any portion of a disability trust that is treated as a grantor trust.

3.11.14.17.7
(01-01-2015)Line 21 – Total Deductions

Line 21 of Form 1041 is the total of Lines 18 through 20.

Line 21 can be positive or negative.

If Line 21 is blank or illegible:

If entries are present on any of Lines 18 through 20, add these amounts and edit the total to Line 21.

Exception:

If a Line 18 entry has been deleted based on the instructions in IRM 3.11.14.17.4, do not recompute Lines 21 and 22.

If Lines 18 through 20 are blank, determine if entries are present on Lines 13, 14 or 15 of Schedule B (Page 2 of Form 1041):

If ...

Then ...

Line 15 of Schedule B is present or can be computed from the lesser of Lines 13 or 14 of Schedule B,

Edit this amount to Line 18 of Form 1041.

Reminder:

If Line 18 is blank and the amount entered on Line 21 is the total of Lines 18 through 20, do not perfect Line 18

Perfect Line 21 of Form 1041 accordingly.

Line 15 of Schedule B is blank and cannot be computed,

Compute Lines 1, 2a, 3, 4a, 5, 6, 7 and 8 of Schedule K-1.

Edit the amount to Line 18 of Form 1041.

Perfect Line 21 of Form 1041 accordingly.

If an entry should have been placed on Line 22 (Taxable Income) but was inadvertently placed on Line 21 and Line 22 is blank
or zero:

Delete Line 21 amount and edit that amount to Line 22.

3.11.14.17.8
(01-01-2015)Tax-Exempt Entries

Taxpayers cannot claim deduction against Tax Exempt Income on a Form 1041.

If deductions against Tax Exempt items are notated on Form 1041 or attachments, do not include those items in any entries on Lines 10–21. (Figure 3.11.14-42)

If the taxpayer indicates that all of a negative amount on Line 15a, 15b, and 15c is for a Tax Exempt Allocation, there is only one other deduction claimed
within Lines 10 through 14, and Line 1 in the "Other Information"
Section (Page 2 of Form 1041) is marked "Yes"
or is blank and no computation is present, process as follows:

Delete any negative amounts reported on Line 15a, 15b, or 15c.

Reduce the remaining Deduction line amount (positive) by the negative amount the taxpayer entered on Line 15a, 15b, or 15c.

Perfect Line 16, if necessary.

Example:

If $461.00 is entered on Line 14 (positive amount), Line 15a or 15c is a negative $120.00, and Lines 10 through 13 are blank,
delete the negative $120.00 from Line 15a or 15c and reduce the Line 14 amount from $461.00 to $341.00 ($461.00 – $120.00
= $341.00). Also perfect Line 16 (if necessary) as a positive ($341.00) amount. (Figure 3.11.14-43)

Note:

Although this example shows the one positive deduction amount on Line 14, the procedure applies to a positive entry on any
of the Lines 10 through 14.

If an entry should have been placed on Line 22 (Taxable Income) but was inadvertently placed on Line 21 and Line 22 is blank
or zero:

Delete the Line 21 amount and edit that amount to Line 22.

If unable to determine the correct deduction amount and there are negative entries on Lines 10 through 15c:

"X"
the negatives entries.

Add these entries to Line 8 of Form 1041.

Continue normal processing.

3.11.14.18
(01-01-2015)Line 22 – Taxable Income

If Line 22 is blank, subtract Line 21 from Line 17 and edit on Line 22.

If Line 22 is blank and it can be determined that an entry that should have been placed on Line 22 was inadvertently placed
on Line 23.

"X"
the Line 23 amount and edit the amount to Line 22.

3.11.14.19
(01-01-2015)Line 23 – Total Tax

Line 23 of Form 1041 is derived from Line 7 of Schedule G.

If Line 23 contains a negative amount (a loss), determine Line 23 from Line 7 of Schedule G (Page 2):

If ...

Then ...

Line 7 (Schedule G) is positive,

Edit the Line 7 amount to Line 23.

Line 7 (Schedule G) is negative,

"X"
the Line 23 amount.

If Line 23 is blank or illegible:

Compute by adding Lines 3 through 6 of Schedule G.

Edit the total to Line 23 of Form 1041.

If there are no entries on lines 3 through 6 of Schedule G and no entries are present on Lines 24 through 26, edit the amount
from Line 27 to Line 23.

Note:

For instructions for editing Form 1041 with an entry present on Line 7 of Schedule G, see IRM 3.11.14.31.

If it is determined that an entry was inadvertently placed on Line 23, determine if the entry should be edited to Line 22:

If ...

Then ...

The Line 23 entry should be on Line 22 and Line 22 is blank,

"X"
the Line 23 amount and edit the amount to Line 22.

The Line 23 entry should be on Line 22, but an entry is already present on Line 22,

"X"
the Line 23 amount.

Note:

Do not edit the amount to Line 22.

Continue editing the return.

If unable to determine where the Line 23 entry belongs,

"X"
the Line 23 amount.

Note:

Do not edit the amount to Line 22.

Continue editing the return.

Note:

For instructions for editing Schedule G, see IRM 3.11.14.26 through IRM 3.11.14.31.

Taxpayers may report a special tax for Electing Small Business Trusts (ESBT) on Line 7 of Schedule G. Effective for TY 2002,
the taxpayer should check the "ESBT"
box in Section "A"
(Type of Entity) of Form 1041 or they may notate one of the following on the dotted portion of Line 7, Schedule G:

ELECTING SMALL BUSINESS TRUST

ESBT

IRC Section 641(c)

If one of the above notations is written on the dotted portion of Lines 7, process as follows:

If ...

Then ...

The ESBT amount was included on Line 7 (Schedule G) and Line 23, Form 1041,

Continue editing the return.

The ESBT amount on Line 7 (Schedule G, was not included on Line 23) (Form 1041),

Increase Line 23 (Form 1041) by the ESBT amount written in on Line 7 of Schedule G.

The ESBT amount is written separate from the Line 7 (Schedule G) amount,

Increase Line 23 (Form 1041) by the ESBT amount written in separately from the Line 7 (Schedule G) amount (if the taxpayer
has not already done so).

Reminder:

Edit the ESBT indicator "1"
in the left margin next to Line 10, in "2 - 1"
format when the ESBT box in Section "A"
is checked or there is an indication of ESBT.

3.11.14.20.3
(01-01-2015)Line 24c – Balance of Estimated Tax Payments

Accept taxpayer's entry.

3.11.14.20.4
(01-01-2015)Line 24d – Tax Paid with Extension Form

If there is an illegible entry on Line 24d, examine the attached Form 7004, Application for Automatic Extension of Time To
File Certain Business Income Tax, Information, and Other Returns (or attachment in lieu of) or determine the amount from entries
on Lines 24a, 24e or 24h (24i for TY 2006).

If a legible amount is found, place an "X"
to the left of the illegible entry and edit the verified amount to the left of the "X"
.

3.11.14.20.5
(01-01-2015)Line 24e – Federal Income Tax Withheld

Form W–2, Form W2–G, Form 1099R, or a supporting statement (i.e., an earnings statement with year-to-date totals) must be
attached to Form 1041 if an entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is present on Line 24e.

If an entry is present on Line 24e ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but, supporting documentation is not attached, correspond for the missing form.

Line 24e or 25 can also be used to accommodate unusual credits such as "Claim of Rights"
for which there is no line on the return.

If no supporting documentation is attached for a credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for which there is no specific line, correspond for support of this unusual credit.

When examining a return for a Form W–2, W2–G, etc. and the form is not found but a Form 7004 is found and there is no entry
on Line 24d, determine if the Line 24e amount equals the amount on Form 7004:

If the entries are ...

Then ...

The same,

Move the Line 24e amount to Line 24d.

Not the same and the amount claimed is ≡ ≡ ≡ ≡ ≡ ≡ ≡

Correspond.

3.11.14.20.6
(01-01-2015)Line 24f – Form 2439

Form 2439, "Notice to Shareholder of Undistributed Long-Term Capital Gains"
is reported on Line 24f.

Note:

Paper returns sent in by the filer that states their return was rejected through the E-file system require a signature. Form 8879-F is not an acceptable substitute for a paper return.

If the jurat is altered or stricken (crossed-out), see IRM 3.11.14.5.3.5 for frivolous return instructions.

Accept a "signature declaration"
(a signature with jurat obtained through IRS correspondence) if attached to the return.

If the "signature declaration"
is altered or stricken (crossed-out), see IRM 3.11.14.5.3.5, for frivolous returns instructions.

If the taxpayer responds with a self prepared "signature declaration"
it must contain the same language as the jurat on the tax return: e.g., "UNDER PENALTIES OF PERJURY, I DECLARE THAT I HAVE EXAMINED
THIS RETURN, INCLUDING ACCOMPANYING SCHEDULES AND STATEMENTS, AND TO THE BEST OF MY KNOWLEDGE AND BELIEF, IT IS TRUE, CORRECT
AND COMPLETE."

Form 8879-F is not an acceptable signature substitute for a paper return.

Since tax examiners are not expected to be handwriting experts, IRC §6064 and IRC §6064-1 of Regulations allows the Service
to presume that the signature on a return, statement, or other document is the true signature of the person who actually signed
the document.

Note:

A "✓"
or "X"
used to designate where the taxpayer should sign the return is not considered a valid signature.

Only one correspondence attempt is required for a signature.

Facsimile Signature – Rather than actually signing each return, a Fiduciary may use a "Facsimile"
or stamp of the signature. If a facsimile is used, the person filing the return must retain a letter signed by the Fiduciary
with a statement that the facsimile represents their signature; a statement that the signature was placed there by their direction;
and, a list of each return (Name and TIN) being covered by the letter.

3.11.14.23
(01-01-2015)Fiduciary's EIN (Trusts Only)

The Fiduciary's EIN box is located to the right of the Signature area and above the Tax Preparer's box on Form 1041.

A Fiduciary's EIN must be present when certain criteria is met. Edit a "Check mark"
to the right of the Fiduciary EIN when all of the following apply: (See Figure 3.11.14-51)

There is a positive entry on Line 22.

There is an entry on Line 24a (Estimated Tax Payments).

Fiduciary Code "2"
or "3"
is edited.

The Fiduciary's EIN is different than the Trust's EIN (Section C).

The return is not an amended return.

The fiduciary is a trust or financial institution (i.e., bank, credit union, savings and loan, N.A.). This information will be documented in the Entity section on either the
"Name of Estate or Trust"
line or on the "Name and Title of Fiduciary"
line and may follow in care of or %.

Exception:

Do not edit the EIN if the taxpayer has notated "TRUST COMPANY"
(if other than part of a financial institution name), e.g., bank, credit union, savings and loan, N.A., etc., in the Entity
area or Signature area. N.A. stands for National Association.

3.11.14.24
(01-01-2015)♦Paid Preparer Checkbox Indicator♦

The Paid Preparer Checkbox is located next to the taxpayer signature area. It indicates whether the taxpayer has elected to
allow the Paid Preparer to answer questions about the return as it is processed.

No action is required on amended returns.

Take the following actions when an entry is present in the Paid Preparer Checkbox:

If ...

Then ...

Only the "Yes"
box is checked,

Take no action.

The "No"
box is checked; neither box is checked; or both boxes are checked,

The Preparer's Social Security Number (SSN) (2009 and prior revisions) or Preparer's Tax Identification Number (PTIN) is located
to the right of the Preparer's Signature in the PTIN box (Preparer's SSN or PTIN box for 2009 and prior revisions) at the
bottom-right corner of Form 1041, Form 1041-QFT and Form 1041-N.

No action is required on amended returns.

A PTIN begins with the alpha "P"
followed by an eight digit number (e.g., PXXXXXXXX). Circle the PTIN if all zeroes or all nines.